Surveys: Healthcare Not Immune to Economic Downturn

"We will wield technology's wonders to raise healthcare's quality and lower its cost.”

—President Obama’s Inaugural Address

The U.S. healthcare industry — while ripe for the technological innovation the new presidential administration touts — is facing unprecedented challenges.

The current global economic ills are spreading to hospitals and health plans. Higher unemployment means fewer insured patients, more underinsured emergency room visitors and fewer elective surgeries. At the same time that they must cut costs, healthcare providers and insurers are being challenged to upgrade their IT to meet government and consumer mandates for privacy, efficiency and better quality of care.

CSC conducted two surveys recently to better understand and respond to these challenges facing the healthcare industry.

			Learn more about Treatment Plan: Hospitals Respond to the Economic Crisis. Learn more about Insuring the Future: Health Plans Respond to the Financial Crisis. Read about CSC's solutions for healthcare organizations. Contact us today.

Hospitals facing "double whammy"

Treatment Plan: Hospitals Respond to the Economic Crisis reports that 74 percent of the hospital executives CSC surveyed have already taken action to respond to the financial crisis, and 20 percent more have developed plans to do so.

“With the double whammy of the recession and credit crisis, hospitals are getting hammered from all sides. We asked the executives to compare and contrast this downturn with others, and over 90 percent said this is worse,” says David Hampshire, managing director of CSC’s Health Delivery Group.

The survey finds that hospitals have cancelled, delayed or deferred hospital construction projects and some IT projects. They also anticipate that admissions for elective surgery will decline, while emergency department visits by uninsured patients will increase.

“We are advising our clients to focus on projects that are driven by regulatory mandate or
improved reimbursement, or that have a clear return on investment,” notes Hampshire. He adds that CSC can help clients respond to the Obama administration’s emphasis on electronic health records for both ambulatory care and care within the hospital.

“CSC is in a strong position to support our clients in meeting those technological advances coming downstream,” says Hampshire. “We’ve created electronic health records in Scandinavia, we’ve been supporting the UK National Health Service, and we’re helping states like Massachusetts and the U.S. federal government to start down the path to electronic health records.”

Plans must address changing demand

For Insuring the Future: Health Plans Respond to the Financial Crisis, CSC interviewed health plan executives about the impact of the current financial downturn on their business. And they resoundingly predicted that the current economic crisis would have a significant and long-lasting impact on health plan operations.

Softening demand for health coverage was a major concern, as health plans anticipate declining enrollment to follow downsizing in their major customers. Sixty-nine percent of the executives were very concerned about the impact of rising unemployment on company operations and profitability.

“Health insurers used to market and sell to large companies like CSC, with limited interaction with individual members,” explains Scot McConkey, managing director of CSC’s Health Plan Group. “That is changing as they move from a wholesale to a retail orientation and roll out new products that engage members as individuals. At the same time, economic issues facing health plans are making them more conscious of how they spend money. There’s an interesting dynamic going on.”

The longer the downturn continues, the survey finds, the more likely the impact would be felt in operations and that planned projects and initiatives would be deferred. In the meantime, they are prioritizing responses that address operational performance and that will drive new business and revenue even during difficult times. More than half of the respondents had completed or anticipated cost-cutting projects and staff reductions.

“We’re advising our clients to focus on ongoing cost control and creative, cost-effective approaches for completing key initiatives,” says McConkey. “Whether it’s ongoing operations or management of IT applications, CSC’s deep domain expertise coupled with our shared services model can help clients do more with less money.”